The Bank of England has admitted to an error in its data and said consumer borrowing has been growing at its fastest rate since before the financial crisis five years ago.
The Bank said on Thursday that net unsecured lending to consumers – overdrafts, personal loans and credit cards – rose by £864m last month, the biggest increase since December, and more than double the £411m figure it had first reported.
The jump meant that unsecured lending in the three months to September increased by 5.8% on an annual basis, the strongest growth since April 2008.
The surge in borrowing will raise concerns that Britain is relying on a debt-fuelled recovery, at a time when policymakers have repeatedly stressed the need to rebalance the UK economy away from spending and towards manufacturing and exports.
Ross Walker, UK economist at Royal Bank of Scotland, said: "There is an amber warning light here – not an immediate risk but a medium-term financial stability concern. The notion that we have gone through a full deleveraging cycle is abject nonsense."
On Thursday, new data showed UK consumer confidence has risen to its highest level for six years despite the on-going squeeze on disposable incomes.
While levels of confidence remain behind those reported in Germany, Australia and the US, and a degree of pessimism remains, confidence has grown at a faster rate in the UK than in most European countries, according to figures from the market research firm Nielsen.
Its survey of more than 30,000 online consumers in 60 countries found UK consumers rated their confidence at 87 in the three months to the end of September, with levels above 100 indicating optimism and below pessimism.
German confidence stands at 92 and the US at 98, but France stands at 61 and Portugal and Spain at 55 and 56 respectively.
Chris Morley, managing director of Nielsen in the UK & Ireland, said UK consumers had coped with rising household costs and falling real-term wages by shopping carefully and hunting out bargains.
He added: "Throughout this period, British consumer confidence remained stubbornly weak, but in recent months it has finally taken an upward turn as the green shoots of economic recovery start to show."
Positive news on the UK housing market has boosted sentiment. But Nielsen also revealed a growing perception that the economic downturn in Britain is over. With a move towards optimism, the proportion saying they were willing to spend crept up five percentage points to 39%.
Utility bills are now by far the biggest concern for people living in the UK. Energy and water bills were highlighted as a top concern by 31% of those questioned compared with 27% a year ago as several of the major gas and electricity providers have hiked prices in recent weeks.
theguardian.com
The Bank said on Thursday that net unsecured lending to consumers – overdrafts, personal loans and credit cards – rose by £864m last month, the biggest increase since December, and more than double the £411m figure it had first reported.
The jump meant that unsecured lending in the three months to September increased by 5.8% on an annual basis, the strongest growth since April 2008.
The surge in borrowing will raise concerns that Britain is relying on a debt-fuelled recovery, at a time when policymakers have repeatedly stressed the need to rebalance the UK economy away from spending and towards manufacturing and exports.
Ross Walker, UK economist at Royal Bank of Scotland, said: "There is an amber warning light here – not an immediate risk but a medium-term financial stability concern. The notion that we have gone through a full deleveraging cycle is abject nonsense."
On Thursday, new data showed UK consumer confidence has risen to its highest level for six years despite the on-going squeeze on disposable incomes.
While levels of confidence remain behind those reported in Germany, Australia and the US, and a degree of pessimism remains, confidence has grown at a faster rate in the UK than in most European countries, according to figures from the market research firm Nielsen.
Its survey of more than 30,000 online consumers in 60 countries found UK consumers rated their confidence at 87 in the three months to the end of September, with levels above 100 indicating optimism and below pessimism.
German confidence stands at 92 and the US at 98, but France stands at 61 and Portugal and Spain at 55 and 56 respectively.
Chris Morley, managing director of Nielsen in the UK & Ireland, said UK consumers had coped with rising household costs and falling real-term wages by shopping carefully and hunting out bargains.
He added: "Throughout this period, British consumer confidence remained stubbornly weak, but in recent months it has finally taken an upward turn as the green shoots of economic recovery start to show."
Positive news on the UK housing market has boosted sentiment. But Nielsen also revealed a growing perception that the economic downturn in Britain is over. With a move towards optimism, the proportion saying they were willing to spend crept up five percentage points to 39%.
Utility bills are now by far the biggest concern for people living in the UK. Energy and water bills were highlighted as a top concern by 31% of those questioned compared with 27% a year ago as several of the major gas and electricity providers have hiked prices in recent weeks.
theguardian.com
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